Friday, October 23, 2020

Australia’s Westpac to admit anti-money laundering breaches in court

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Westpac is expected to admit major deficiencies in its anti-money laundering and terrorism financing obligations as it faces a potential billion dollar-plus fine.

Lawyer for the bank said in the Federal Court on Monday it was expected to admit to all or most of the 23 million breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act it has been accused of by the Australian Transaction Reports and Analysis Centre.

The government regulator is seeking a civil penalty of between $21 million and $17 million for each offence meaning the maximum potential fine is $483 trillion, however the actual figure is likely to be much smaller.

The matter was heard before Chief Justice James Allsop for the first time on Monday and both sides said they hoped to have a set of agreed facts and be prepared for a penalty hearing when it returns to court in February or March 2020.

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“I’m confident in saying that there is a high degree of commonality in the sense that there will only be a small number of facts in dispute, if any,” AUSTRAC’s Simon White SC said.

In documents filed with the court, AUSTRAC accuses Westpac of systemic failures and “indifference by senior management and inadequate oversight by the board”.

The alleged breaches relate to its correspondent banking relationships with financial institutions in foreign countries and its failure to properly report millions of fund transfers.

It’s accused of failing to carry out due diligence on customers sending money to the Philipines and Southeast Asia.

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The regulator identified 12 customers who had repeated patterns of frequent, low-value payments which were “indicative of child exploitation risks” and some of the payments were made to alleged or suspected child traffickers.

“Had Westpac been applying appropriate automated detection scenarios across all channels, this highly suspicious activity would have been identified sooner,” AUSTRAC said.

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